Why in the News?

The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2024 has been awarded jointly to Daron Acemoglu, Simon Johnson, and James A. Robinson for their influential research on the formation of institutions and their impact on economic prosperity. Their work explores how political and economic institutions shape incentives, influence economic outcomes, and ultimately drive prosperity within societies.

KEY FINDINGS

• European colonial institutions influence current economic outcomes and wealth disparities.
• Prosperous regions during colonization often became the poorest today.
• There is a correlation between settler mortality rates and current GDP per capita.
• Extractive institutions hinder economic growth while inclusive institutions promote it.
• Areas with lower settler mortality rates tend to have developed more inclusive institutions.
• Societies can transition from extractive to inclusive institutions, reducing poverty.

               Daron Acemoglu (left)                                                            Simon Johnson (center)                                            James A. Robinson (right)